Bell Mobility told to estimate costs of shorter phone deals

President says consumers overwhelmingly chose three-year contracts.

While consumers complain about being handcuffed to long-term cellphone contracts, CRTC chair Jean-Pierre Blais has told Bell Mobility to estimate the cost of reintroducing one- and two-year deals the company withdrew at the end of 2011.

Blais, who was named by the Harper government in June to head the Canadian Radio-television and Telecommunications Commission, told Bell during CRTC hearings Thursday on wireless services that is has until Feb. 22 to submit the numbers.

He said the exercise is justified because of the volume of complaints to the Commissioner for Complaints for Telecommunications Services, created at the behest of the CRTC, from consumers who say they are held hostage by lack of choice.

Wade Oosterman, Bell Mobility president, said in an interview that the wireless unit of Montreal-based BCE Inc. dropped the two- and one-year contract options because consumers overwhelmingly chose three-year deals.

The contracts offer mobile devices such as the new BlackBerry Z10 smartphone at a heavy discount to the sticker price in exchange for a service commitment, with the hardware discount proportionate to the length of the agreement.

Three-year deals have been a lightning rod for many consumers, who say they contain hidden fees and prevent them from switching to better offers and the latest devices.

Oosterman said Bell has responded to consumer discontent with measures including greater notification of pricing details, adding that complaints to the CCTS involving Bell Mobility have fallen 21 per cent year over year.

He also said consumers can opt out of long-term deals at any time without penalty if they pay the remainder owing on the handset.

The CRTC, Canada’s telecom regulator, is conducting public consultations toward the creation of a mandatory national code for wireless services, which it hopes to have in place by the summer.

Speaking at hearings on the code in Gatineau, Que., Oosterman said if the commission requires one- and two-year offerings it would lead to lower subsidies and higher up-front costs for consumers.

“The more complexity, the more the costs go up,” he said, adding that if the CRTC follows the EU and U.K. lead and bans contracts longer than 24 months, there would be a negative impact on investment and innovation in Canada’s $19 billion wireless market.

The wireless carriers prefer a uniform code to supersede provincial regulations, and want a staged implementation. The code, which would be enforced by the CRTC, could mandate caps on data roaming fees and make it easier for consumers to switch providers.

While Canada’s three main wireless carriers have all moved away from two-year contracts, one- and two-year deals are common around the globe.

OFcom, the U.K.’s telecoms regulator, has said long-term contracts, termination fees and device unlocking charges are a barrier to competition and Canada’s Competition Bureau has urged the CRTC to ban three-year deals.

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